Difference Between Health Insurance And Critical Illness Insurance Cover
If the terms health insurance and critical illness appear interlinked or confusing, you are not alone. Healthcare scenario has undergone rapid changes and insurance, which is always a necessity, is now being looked at more seriously by people across socio-economic strata. Let us try to understand these aspects of health insurance or Mediclaim, as it is also known as, and see how it differs from critical illness cover.
What Is a Health Care Insurance?
Health care is an indemnity insurance. It essentially means whatever is paid by the patient for treatment is reimbursed by the insurance company according to terms and conditions.
What Is a Critical Illness Insurance?
Critical illness insurance is a defined benefit insurance. This means, in case of a critical illness, the insurance company will pay a lump sum amount, which is the defined benefit, irrespective of actual expense incurred.
Example: Let us take an example. Let’s say Mr. Sharma has a health insurance policy with sum insured as Rs. 5 lakhs and a critical care insurance policy of Rs. 25 lakhs. If he needs to undergo hospitalization for an accident and the expense is Rs. 2 lakhs, his health insurance will reimburse him Rs. 2 lakhs. In an actual scenario, if Mr. Sharma has availed cashless facility, he will not pay any charges, but his insurance company will directly settle this amount with the hospital.
Now, if unfortunately, Mr. Sharma is diagnosed with a critical disease like cancer, his critical insurance policy will pay him Rs. 25 lakhs (taking into consideration the “Survival period” clause) as per the policy. If Mr. Sharma also needs to undergo an operation for this critical disease, he can avail the remaining Rs. 3 lakhs from his health insurance for hospitalization and related expenses. He might then use the Rs. 25 lakhs for additional treatment, care, or financial and lifestyle adjustment planning purely at his discretion.
Table below, provides a comparison of the different aspects of these two types of policies.
Table: Comparison of Health Insurance and Critical Care Insurance
| Feature | Health Insurance | Critical Care Insurance |
| Type of Insurance | Indemnity | Defined Benefit |
| No. of Claims Allowed | Multiple. Settled based on Sum Insured and other policy conditions | Usually one after which the policy terminates. In recent times, tiered benefit based on criticality is provided by some insurers |
| Policy status post claim | Policy continues to provide coverage after claim. Coverage is dependent only on timely renewal and available sum insured | Policy terminates (If it is not a tiered benefit plan) |
| Waiting Period Clause | Applicable. But usually the waiting period is shorter and is not applicable in case of accidents. | Applicable. Usually longer than that for a health insurance plan |
| Survival Period Clause | Not applicable | Usually there is a survival period clause |
| Renewability | Mostly renewable throughout life | Mostly provides coverage till a certain age (for.eg. till 75 years of age) |
Conclusion
Although health care and critical care might initially appear to be one and the same, as explained above, they serve quite different purposes and have been created by insurance companies accordingly. In recent times, insurance products have evolved and sometimes health insurance comes with critical care riders. Thus, it is important to fundamentally understand these two in order to make informed choices.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard
